Lessons in Train Collision for China’s Economic Stewards

Russell Leigh Moses is a Beijing-based analyst and professor who writes on Chinese politics. He is writing a book on the changing role of power in the Chinese political system.

Russell Leigh Moses

This weekend’s high-speed train accident in Zhejiang has turned into a political emergency for leaders in Beijing, with more than a few netizens and reporters around the country questioning the government’s response to the tragedy. So on the run are some officials that even the Ministry of Railways spokesman felt compelled to bow in public apology during a press conference for the accident.

Yet even as officials work to contain the fallout from that deadly incident, an equally pressing story for politics in China these days is that the economy is threatening to come off the rails.

The train disaster happened in the midst of the first major plenary of Communist Party leaders at the summer resort Beidaihe in many years—a meeting to try to arrive at a strategy to try to prevent that larger calamity from coming about.

It’s about time Chinese decision-makers came up with such a strategy. For the government they steer is fast becoming a victim of its own recent successes — success in developing short-term policies to keep the economy and society stable, but without any sort of appealing long-term vision for the country.

For some time now—and to the Party’s credit–running the Chinese economy was all about tactical readjustments: putting out the odd fire of inflation, playing with the promise of public housing and enlarged state subsidies, pumping up seasonal stimulus packages, and postponing the restructuring of the banking system so long as local governments and officials were getting their largesse. How to avoid the immensely ugly prospect of a burst property bubble was a decision best deferred to another day. Government elites and their advisers could duck and dodge major economic reforms since the country was humming along with double-digit growth.

Economic success also fired self-confidence on the political front. With the economy in fine short-term shape, Party hardliners were free to find new ways to hammer at the rough edges of society, slamming the door on activists and organized opposition and keeping the lid shut on the Pandora’s box of political reform. When Party reformers tried to replace these policies of “stability maintenance” with a far softer reliance on “social management”—a less onerous alternative involving public accountability—they were smacked down by those same hardliners, who saw no reason to trifle with troublemakers when the economy seemed to be bustling. For the hardliners, “serving the people” was best achieved, as Xinhua recently wrote (in Chinese) in a paraphrase of comments by Chinese security chief Zhou Yongkang, by “developing high-quality special police personnel, accelerating the modernization of armed forces, [so as to] resolutely safeguard national security and social stability.” After all, Hu Jintao and his allies ascended to the leadership with the mandate to recentralize politics and economics, and they have done remarkably well in that regard.

But now, the Party faces multiple economic challenges—spiraling inflation, a contracting manufacturing sector, higher labor costs and growing segments of society unimpressed by prestigious projects that bring them little direct benefit. The train crash over the weekend also appears to confirm the mounting disquiet among the attentive public here of the human costs of high-profile infrastructure.

Leaders can ill afford to bypass some sort of major mid-course correction. Something has to give. And so the summer leadership meeting at Beidaihe looks like a policy showdown on the economy, with a split between two camps.

On one side are those who wish to stay the course of state control of the economy, and are confident about China pulling out of this impending slide, just as the country has before. This is a coalition of hardliners and heavy-industry types (particularly those with ties to the petroleum industry). They have pulled parts of the official media in their direction in recent months, counseling continuity in Beijing’s fire-fighting approach to the economy and acting optimistic. “The government has seen the problems of inflation and real estate over-pricing,” Yi Xianrong of the Chinese Academy of Social Sciences was quoted by the Beijing Times as saying Monday (in Chinese). “The rapid growth of Chinese economy will remain on track.”

In the opposing camp are those who worry that recent troubles are symptoms of a larger problem of how the Chinese economy is managed. Social concerns are part of their anxiety, especially where income is concerned, as they see growing signs of stagnation, and what a recent People’s Daily article (in Chinese) described as the “dangers of disequilibrium and disharmony.” They struggle to move decision-makers in Beijing away from short-term remedies, such as announcing new public housing projects without adequately following through (in Chinese).

These advocates for economic restructuring would like to decentralize economic decision-making. They want to focus far more resources on social programs, with localities having to account for the progress made in meeting the needs of the indigent and unemployed. And as with those in the Party who are on the side of elections and enhanced forms of accountability, these reformers contend that political stability rests on citizens believing that their role matters in policy-making.

However, like their partner colleagues urging political reform—that is, something more than just strengthening the Communist Party—the voices seeking a new economic direction for China are scattered in the government. Their concern is not yet a potent coalition: Though their advice finds favor among some in the leadership, they’ve lacked the political clout to handcuff the hardliners.

Still, the train accident in Zhejiang could embolden these reformists to stand up against those seeking to stay the economic course. For those cadres now have an even better argument: That China needs the sort of real economic restructuring that includes some measure of political reform—one that would take account of public voices, which have proved wiser in this instance.

Surely a growing number in the Party now recognize that moving forward in the same old way is unsafe at any speed.

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